Social Enterprise in Vietnam

Peter Cornish investigates the many ways businesses can give back to Vietnam. Photos by Romain Garrigue.

There’s a buzzword floating around on the peripheries of Vietnam’s start-up community. Social enterprise. It’s a concept encouraging businesses and entrepreneurs to look further than the traditional bottom line of profit, to a double bottom line of profit and people, and perhaps even a triple bottom line of profit, people and planet.

The concept itself is not new, but has only recently has it started to become recognised as a legitimate business model in Vietnam, and a means to describe a new approach to business and entrepreneurship. But the question still asked by many is what exactly is a social enterprise? Is it a charity, a non-profit, a part of corporate social responsibility or just an ethical business?

The answer is varied, and, whilst perhaps not a subject of hot debate, is certainly a topic of ongoing discussion. Some place emphasis on social impact, others favour a more commercial approach, and the definition is evolving as the business model adapts to the environments it’s applied in, and the motivations of the social entrepreneurs who are using it to bring about change.

In the broadest definition a social enterprise is a business with a social mission. In many respects, it looks and operates like a traditional business, but take a closer look and the driving motivation behind the enterprise is achievement of a social, environmental, cultural or community outcome, whilst ensuring economic returns at the same time.

Pham Kieu Oanh, founder and director of the Centre for Social Initiatives Promotion (CSIP), also describes social enterprise as a concept rather than an entity. “Social enterprise is about making social changes by innovative and sustainable business initiatives,” Oanh told AsiaLIFE.

Oanh said a social enterprise is a hybrid model that can emphasise ‘for social’ or ‘for profit’, and operate “under different legal entities depending on its specific purpose and operating conditions”.

Creating sustainable revenue is a critical factor that differentiates a social enterprise from a traditional charity, typically dependent on the generosity of donors and external funding to achieve its social objectives. “Social enterprises aim to create social benefits, and are operated with a strong entrepreneurial spirit to achieve both social benefits as well as economic returns.” Oanh said.

Unlike traditional businesses, a social enterprise generates income not to deliver dividends and profit to shareholders, but to re-invest in their social mission. The more money they make, the greater the impact they have. Or at least that’s part of it. “They can operate in various forms with different legal statuses, such as micro-finance funds, charity funds, co-operatives and even some social organisations, business organisations or public service enterprises in the public sector,” Oanh said.

But another common feature of social enterprises, typically in developing countries, is the empowering of people, especially those from marginalised or disenfranchised communities. This often takes the form of training and employment, providing life changing opportunity to those who are excluded or underprivileged. By some definitions, this alone is sufficient to denote a social enterprise.

Social Business Models

Looking further at how social enterprises can drive social change, Oanh, said five main models were being adopted by social entrepreneurs in in Vietnam and internationally.

Fitting with other definitions, the first model seeks to create equal employment opportunity and empower disadvantaged groups, such as street children, trafficking victims or those living with disabilities. Sometimes referred to as the employment model, examples in Vietnam include hospitality training entities KOTO and Streets International, software company Enablecode, and domestic help agency Dependable Progress.

The second model provides basic social products and services to low-income or marginalised communities, such as the PROTEC Helmets initiative. This approach, also referred to as the innovation model, looks for solutions through product or service innovation, such as providing access to clean water or electricity in remote communities.

The fourth acts as a channel to distribute public services, bridging the gap between public needs and state ability to provide them. Bus and train online ticketing agency Vexere Joint Stock Company fits this description, although at present the model is not popular in Vietnam.

The final model focuses on revenue generation to finance social activities and is often referred to as the give back model, applying the ‘more money you make the greater your impact’ approach. A typical example of this model in practice is the Pay It Forward initiative, such as the one operated by Vicolo pizza restaurant in Ho Chi Minh City’s backpacker district.

This last model, often combined with the first, is perhaps the one drawing the most interest from the startup community in Vietnam, balancing the goals of making money from a profitable business and the desire to give back to the community at the same time.

What we should take from these many definitions is that the labels are not important, other than for taxation or legal purposes, and many social enterprises in Vietnam are in fact operating legally as normal businesses. What matters is the goal of creating something meaningful, both commercially and socially, and to look beyond the traditional bottom line of profit to understand you can do good while also doing well.

How have social enterprises evolved in Vietnam?

Prior to the 1986 Doi Moi policy there were no NGOs operating in Vietnam and the state took responsibility for providing social support. Community-centred organisations such as the Women and Youth Unions were controlled by the government, and cooperatives offered a limited form of socio-economic opportunity where communities could work together for mutual benefit.

Many of these early cooperative groups were founded to provide employment for marginalised groups, and often operated in the context of cottage industries. Encouraged by the state, by the middle of the 1980s there were thousands of cooperative organisations across the country providing work and income to local communities.

Yet although the social, employment and economic components of early cooperatives could qualify them for social enterprise status, it wasn’t until the decades immediately after Doi Moi that the new open door policies lead to huge official development assistance (ODA) funding. With a sudden influx of money, knowledge and experience, new models and methods appeared to offer support to social development.

NGOs and other humanitarian organisations flocked to Vietnam, working on projects to reduce poverty, provide health care and education, and develop access to essentials such as water and electricity. With this change in policy came massive growth in the development sector that prompted the founding of early stage social enterprises that operated privately.

While many of them remained funded by international donors, a small number of these early pioneers struggled to function as stand-alone business entities, believing that sustainability could only happen this way. With measured success, they proved the potential of business practices being applied to solve social problems, and opened the way for the country’s third generation of social enterprises.

With Vietnam now entering middle income status, external social development funding is no longer available to the extent it once was, yet social issues remain that still need to be addressed. The benefits of applying business models to solve social issues has been proven, and organisations are springing up to support the growth of these innovative enterprises. With ongoing technological advances enabling social innovation, especially among the younger generation, Vietnam is entering an exciting new stage of social entrepreneurship.

Who’s helping the helpers?

Set up with the mission to ‘inspire, connect and empower communities and individuals’ tackling social and environmental issues, CSIP is a pioneer in assisting sustainable social businesses in Vietnam.

Founded in 2008 and based in Hanoi, CSIP provides direct investment and support to social enterprises and entrepreneurs, working with stakeholders to raise awareness of social innovation, and improving the eco-scape that such organisations operate in. Spreading the idea of ‘business for community’, they work closely with those creating positive social impact, as well as legislators working to build legal frameworks and support policies for social enterprises.

Through a network of support, they are able to connect social startups with potential business partners, investors, experts, volunteers and collaborators etc. to help acquire and build the basic resources needed for sustainable success.

Acting as a two-way bridge between impact investors and social entrepreneurs, SPARK helps identify the capacity and resource development needs of social enterprises, including financial, human, intellectual and social requirements. Through their Marketplace initiative they promote local services in each province, hosting events and incubation services, and providing connections between local authorities and other concerned organisations.

New to Vietnam is MakeSense, a global organisation connecting social entrepreneurs across the world to find solutions to widespread social issues. Aimed at the tech-savvy younger generation, such as those working in Vietnam’s start-up community, MakeSense uses ‘disruptive’ technologies to build and connect global communities to scale solutions on a faster, global scale.

Minh Thy Nguyen Ngoc, Community Coordinator of the MakeSense HCMC Chapter is building a network of young, socially minded entrepreneurs and volunteers to look at how technology can be used in Vietnam for social good. Partnering with local organisations, her chapter hosts events and connects communities working on the ground to assist them to start up and scale their businesses.

“We host Hold Ups, creative ideation workshops that use design thinking to find solutions to social problems. People come to us with a social problem and a community of participants work together to think of a solution. It’s happening everywhere, including Vietnam. We come up with suggestions for names, logos, business models, funding and communication plans and then provide volunteers to make it a reality,” Thy told AsiaLIFE.

The organisation supports their design thinking workshops with online business development training programmes to help upskill participants. It then helps with the move from academic knowledge to practical implementation. By connecting a growing number of social entrepreneurs throughout the country at a level they can respond and relate to, MakeSense is set to engage and drive social innovation in Vietnam to the next lvel

Are you a social entrepreneur?

Vietnam is a country of enterprise and entrepreneurship. While business activities traditionally focus on a financial bottom line, an increasing number of the country’s entrepreneurs are looking at how they can do well financially, while also doing good through creating social impact.

Entrepreneurs typically look for solutions to problems as a way to make money. Social entrepreneurs look at how they can solve social problems, through product innovation, employment opportunities or just through generating revenue to support a social cause.

Rather than looking at these problems as someone else’s responsibility, they combine innovation and creativity as a way to overcome societal issues.

As with most entrepreneurs, the success of their venture is not just a good idea but the ability to practically implement it. By applying business knowledge, an understanding of the market, and strong financial capabilities, they can create long-term, sustainable, scalable answers to problems that others ignore.

Social entrepreneurs understand the importance of community and that the success of a project depends on more than just a strong, committed leader. Social technologies are connecting individuals to build communities with shared goals, opening the doors to collaborative projects and the sharing of ideas, resources and solutions.

Determination and commitment are needed for any entrepreneurial venture, especially in an eco-scape that is still in early stages. But with the rules still being written, opportunity for creative, out-of-the-box thinking means that innovation is king. As Vietnam continues to develop the next generation of social entrepreneurs will rise to the top, taking the banner from those who struggled to pave the way.